A Collateral Release Letter is a crucial document used in Saudi Arabian secured financing transactions when a borrower or security provider has satisfied their secured obligations and is entitled to the release of their collateral. This document type is particularly important in the Saudi Arabian context as it must comply with both the Commercial Pledge Law and Shariah principles governing security interests (Rahn). The letter formally evidences the discharge of the security, confirms the fulfillment of the secured obligations, and authorizes the release of any registered security interests. It should be used when all or part of the secured obligations have been satisfied and the relevant collateral needs to be released. The document typically includes details of the original security arrangement, specific description of the collateral being released, and necessary authorizations for deregistration with relevant authorities.
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1. Letter Header: Date, reference number, and formal letterhead of the releasing entity
2. Addressee Details: Full name and address of the entity whose collateral is being released
3. Reference to Original Security: Clear identification of the original security agreement, date, and parties involved
4. Confirmation of Obligation Fulfillment: Statement confirming that the secured obligations have been satisfied
5. Release Declaration: Explicit statement releasing the security interest and collateral
6. Collateral Description: Clear identification of the collateral being released
7. Return of Security Documents: Statement regarding the return or cancellation of original security documents
8. Authorization: Statement of authority to execute the release
9. Governing Law: Reference to Saudi Arabian law and Shariah compliance
10. Signature Block: Authorized signatory details and execution space
1. Partial Release Provisions: Required when only certain collateral items are being released while others remain secured
2. Remaining Obligations: Needed when there are other outstanding obligations that are not affected by this release
3. Registration Requirements: Required when the release needs to be registered with authorities or SAMA
4. Third Party Consents: Include when third party approvals are necessary for the release
5. Consideration: Required when there is specific consideration for the release beyond obligation fulfillment
1. Schedule 1 - Detailed Collateral Description: Comprehensive list and description of all collateral items being released
2. Schedule 2 - Original Security Documents: List of all security documents being cancelled or returned
3. Schedule 3 - Evidence of Authority: Copies of corporate authorizations or powers of attorney
4. Appendix A - Release Registration Forms: Any required governmental or SAMA forms for registering the release
5. Appendix B - Supporting Documents: Copies of relevant payment evidence or obligation fulfillment proof
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